Hong Kong shares slump as trade war worries return

Dec 5 (Reuters) - Hong Kong shares dropped sharply on Wednesday amid renewed fears that China and the U.S. will be unable to reach an agreement on trade, and as an inversion in the U.S. yield curve raised the spectre of recession.

** The Hang Seng index closed 1.6 percent lower at 26,819.68 points, while the China Enterprises Index lost 1.4 percent to 10,756.95 points. ** The sub-index of the Hang Seng tracking energy shares dipped 2.4 percent, while the IT sector dipped 1.99 percent, the financial sector ended 1.93 percent lower and the property sector dipped 0.57 percent. ** China's commerce ministry said on Wednesday that Beijing and Washington will push forward with trade negotiations in the next 90 days and that it is confident that an agreement can be reached, amid growing scepticism that the two sides will be able to reach a substantive deal on a host of highly divisive issues before the deadline. ** U.S. President Donald Trump on Tuesday held out the possibility of an extension of the 90-day trade truce with China but warned he would revert to tariffs if the two sides could not resolve their differences. ** BAIC Motor Corp Ltd's shares slumped as much as 13.5 percent on Wednesday following a media report saying Germany's Daimler AG was considering increasing its stake in its joint venture with the Chinese automaker. BAIC shares finished 11.3 percent lower. ** The top gainer on the Hang Seng was China Resources Power Holdings Co Ltd, which gained 2.19 percent, while the biggest loser was Sunny Optical Technology Group Co Ltd , which fell 7.27 percent. ** China's blue-chip CSI300 index ended 0.5 percent lower at 3,252.00 points, and the Shanghai Composite Index fell 0.6 percent to 2,649.81. ** Around the region, MSCI's Asia ex-Japan stock index was weaker by 1.36 percent, while Japan's Nikkei index closed down 0.53 percent. ** The yuan was quoted at 6.867 per U.S. dollar at 08:23 GMT, 0.43 percent weaker than the previous close of 6.8375. ** The top gainers among H-shares were Guangdong Investment Ltd up 1.68 percent, followed by China Vanke Co Ltd , gaining 1.48 percent and Huaneng Power International Inc, up by 1.4 percent. ** The three biggest H-share percentage decliners were Guangzhou Automobile Group Co Ltd, which was down 5.25 percent, Dongfeng Motor Group Co Ltd, which fell 4.2 percent and CNOOC Ltd, down by 3.8 percent. (Reporting by Andrew Galbraith; Editing by Sunil Nair)